In last 10 years, the population of cars has increased many fold. In today’s context most cars are driven by the owners themselves and would any day prefer to have a quick car wash, rather than leaving the car the whole day at service station.
The Car Wash industry has grown from as simple as hand wash to sophisticated high impact pressure jet wash technology. Owning and running a car wash these days, is not just a mere business but, its one of the most lucrative and respected business.
You’ve probably never stopped to think about where your local car wash fits into the grand scheme of the car wash industry. The only thing you know is that when your car gets dirty you need to wash it, and the closest place to get that done is probably where you go.
Maybe you’ve spent some time considering opening a car wash business of your own while waiting in line for a wash on a bright and sunny Saturday morning. You’ve probably seen a dozen or more cars in queue, with each owner paying between P50 and P500 for a wash that they may not even be totally satisfied with. If you’re like many entrepreneurs, you may have started doing some quick math in your head, projecting what the car wash owner is probably making in one month, then one year. Maybe you even thought “Boy, this place is a cash cow!”
Finally it’s your turn. As you watch your car move through the tunnel, you see how automated the process is, how quickly it gets done, how little actual work seems to be required. “How hard could this possibly be? Anyone can make money running a car wash!” you might have thought.
Most car wash owners can share a wink and a smile at the naivet of the average neophyte. Many people think a car wash is a great business opportunity because they see it as a business that doesn’t require a great deal of hands-on work, but that still produces a great return on your investment. The reality is a bit more complicated than that. It’s not exactly a mystery, but ask any car wash owner, and he will tell you the same thing “It’s not as easy as it looks.”
What A Car Wash Is And Isn’t
When most people think of a car wash, they tend to think of an exterior-conveyor wash. These are the washes that put cars on a motorized track and drag them through a tunnel where they are rinsed, soaped up, washed, rinsed again and possibly waxed. The cars then emerge clean (and perhaps even relatively dry) at the other end. But this is only one type of car wash. Other types of washes include:
- Full-service: This is basically a combination of the exterior conveyor with an inside cleaning added in.
- In-bay automatic (also called a rollover): This type of car wash is an automatic wash consisting of a machine that literally “rolls over” a stationary car parked in a washing bay.
- Self-service: Most self-service car washes are coin-operated brush-and-hose combinations that the driver uses to dispense soap, wash the car and rinse it off.
Myth #1: This Business Is A Cash Cow – Sure, if you drive by your local car wash on a sunny Saturday morning, you’ll see cars waiting in line for a wash. But drive by that same car wash on a rainy Thursday afternoon, and you’ll be lucky if you see one or two cars waiting. You might even see that the shop is closed for the day. Variables such as the time of the week, as well as the weather affect how profitable car wash businesses can be. And sometimes, people are content to let their cars stay dirty for “one more day.”
Myth #2: This Is A Hands-Off Business – As an outsider, all you see are cars being dragged along a conveyor as a bunch of gizmos and do-dads spray, buff, rinse, wax and even dry them. You might not ever see a human being doing any work at all. In truth though, this is not a business that you can put on autopilot. For one thing, those gizmos and do-dads can and will break down. And, depending on the type of equipment you buy, they might break down much more than you think.
Myth #3: You Won’t Have Employees To Worry About – This might actually be true for certain types of car washes (most likely self-service and, to a lesser extent, in-bay automatic washes), but for a full-service or exterior-conveyor wash, you’re going to have to hire employees and inherit the headaches and responsibilities that go along with them. In fact, aside from the initial investment in equipment and commercial space, employees will probably be one of the biggest costs you incur while running your business.
Myth #4: You’re In Total Control – Well, you are your own boss, that’s for sure. But until someone figures out how to control factors like the weather, you’re still going to have to answer to a higher authority. No matter how much time you put into your business, there are still going to be things that go wrong – things you just can’t control.
Even if you’re a mechanical whiz, some of your equipment is going to break down. And if it happens at a peak washing time, like that glorious sunny Saturday morning we keep talking about, you’re going to watch a lot of potential profit go down the drain. You will have to suffer through days or maybe even weeks at a time (depending on where your business is located) when the weather is so bad that the furthest thing on anyone’s mind is getting a car wash. And unfortunately, the bank won’t care about the lousy weather when your loan payment comes due.
Now For The Good News By now, you’re probably having one of two reactions. You’re either: a) sorry that you bought this book because what you’ve just learned is sapping your enthusiasm for opening a business that you thought would be a breeze, or, b) you’re thankful that you bought this book because you think it may have saved you from wasting your money opening a business that you thought would be a breeze.
But before you start looking elsewhere for that great business opportunity, consider this: Many people have made a lot of money washing cars. It’s a service that is always in demand and that most consumers are certainly willing to pay for.
The point in telling you about the pitfalls first is to make you think clearly and critically about just what it is you’re getting into when you open a car wash. Yes, there is the opportunity to make lots of money and have fun doing it, but only if you put in the work required to make your business a success. The rest of this book will deal with how to do just that. Let’s get started by examining the origins of the industry, where it is right now, and where it might be headed in the near future.
The Changing Attitudes Of Customers
People today have less and less time to spend on errands like getting their car washed. One of the main challenges of today’s car wash owner isn’t just providing customers with clean cars, it’s providing customers with clean cars in as short a time as possible. Another challenge is providing the best quality of wash possible. Customers today are better educated about their options and demand more value for their money.
Your Entrepreneurial Spirit
You will also need to evaluate whether a car wash is the right type of business for you. Will you enjoy the tasks that come along with it, fixing machinery, keeping supplies on hand, meeting and dealing with customers, resolving conflicts and crises?
For starters, how energetic are you? If you’re someone who falls asleep in front of the TV every night at 8 o’clock, you may not be able to put in the time and energy needed to make your business a success. If, on the other hand, you’re a dynamo, someone who enjoys expending energy and isn’t happy unless you’re on the go, you’ll have a better chance of being an entrepreneurial success.
The Car Wash That’s Right For You
If you haven’t done so already, now is the time to think about what type of car wash you want to own. Some of the factors to consider in making your decision include:
- The amount of capital you have at your disposal
- The amount of time you want to spend running the business
- The amount of money you’re hoping to make
In general, the type of car wash that’s going to require the biggest investment from you, both in terms of time and money, is a full-service wash. That’s also the type that tends to generate the most revenue. But unless you have Php1 million or more to invest upfront, it’s probably not the best choice. Moving down the line, an exterior-conveyor car wash is the next highest in terms of start-up costs, followed by an in-bay automatic car wash, and finally, a self-service car wash.
The four basic types of a carwash business
1. Self Service Carwash – This carwash business model is favored by many interested in starting a carwash business. Customers wash their own vehicles in individual wash bays. These bays can either have self serve equipment or in-bay automatic equipment in them. Starting a carwash business of this type offers the advantage of low labor costs and it can be open twenty four hours a day, seven days a week.
2. “Stand Alone” Automatic Carwash – When lot size is limited, a carwash business that uses only the in-bay automatic may be preferable. This model consists of one or two in-bay automatics and a vacuum and vending area. Primary considerations in starting a carwash business of this type should be based on local competition, demographics, traffic counts, and lot size.
3. Carwash and Convenience Store Combination – In-bay automatics and self-service carwash equipment can be a profitable addition to a convenience store operation, adding significant revenue to the entire operation.
4. Full Service Carwash – This carwash business option is a conveyor wash system with attendants. Anyone considering starting a carwash business of this type should understand that this model is labor intensive and more expensive than the other types.
Frequently Ask Questions
Q: Do I need experience in the CarWash Business to be Successful?
A: No. Some basic business sense, and the motivation to consistently deliver the highest level of quality service in order to maximize Customer satisfaction.
Q: Who do I start with in the process of building a self-serve car wash?
A: The best place to start is the equipment supplier. The potential supplier should be able to direct you to, or obtain for you, all the necessary resources to locate, design, build, and market your car wash project. The equipment supplier will have experience with what services sell best in which areas and how to lay out your facility for maximum appeal. You should choose a supplier with demonstrated capability to service and support your business after completion and well into the future.
Q: How long can I expect it to take to recover my Investment?
A: Obviously this can vary tremendously based on the success of your business. A good rule of thumb in the retail business world is a 15-20% ROI(return on investment) or a 5-7 year window. You should work within this window to build your business volume so that the profitability is rewarding after the initial investment has been amortized and to make the business attractive for potential resale, lease-out, refinancing, or as collateral for the finance of future projects.
Q: What kind of financing is available for a car wash project?
A: As with any start-up business, capital can come from numerous sources. Banks tend to have the most attractive rates but the most demanding terms. Other government subsidized loan programs are available and should be explored thoroughly. Venture capital can come from family, partners, or even venture capital firms. Equipment can typically be leased and there are tax implications to each type of financing. A CPA or financial advisor can be invaluable in helping to assess your options. You can expect to need up to 20% of the project financing in cash and be prepared to provide extensive business and personal financial information. Lending institutions will require a detailed business plan that will include proposed equipment quotes and projections of revenue and costs. Your equipment supplier should be able to provide much of this information.
Q: How long will it take to build and start-up a self-serve car wash facility?
A: This will vary widely depending on the scope and location of the project. Be prepared to spend 3-6 months in the design to permit phase and another 3-4 months from permit to completion of the construction. Weather and contractor scheduling usually represent the biggest challenges. A number of activities must occur simultaneously so an experienced project manager and a detailed plan are essential. An equipment supplier that can provide a dedicated project manager is a tremendous asset and will prevent unnecessary delays and costs.
Q: How much should I plan to spend to open a self-serve car wash?
A: There are probably more variables involved with this question than any other yet it is the most frequently asked question. If you are going to invest in a business your first question should be “How much money can I plan to make with a self-serve car wash?” The biggest mistake you could make is to under-build for the location since it makes it more difficult to evaluate or recover your investment and leaves the door open for a competitor to move in and take away your customers with a nicer facility. Again, a competent equipment supplier can advise you on expected costs based on the area, the scope of the project, and average or typical experiences of their customers.
How do I start?
- STEP 1: Find a location that needs a car wash. A high-profile location, such as a busy street with good visibility, is a necessity for a business such as this to succeed.
- STEP 2: Contact the city or county department that handles business licenses and request an application.
- STEP 3: Inquire as to what other requirements there are for opening a business. You may be required to provide insurance or follow certain restrictions for the area.
- STEP 4: Contact the Franchise Tax Board to get a wholesale permit, if required. This will allow you to purchase goods without paying taxes if they are to be used in your business.
- STEP 5: Research car washes. Decide whether you want a fully automated car wash or a partially automated one that requires workers to complete part of the washing and drying process.
- STEP 6: Decide if you want to purchase a franchise or open an independent business.
- STEP 7: Make a business plan. You’ll need to have all of the aspects of opening and running the business worked out for the short and long term.
- STEP 8: Get financing. Unless you have a lot of money lying around, you will need to borrow money to build the business.
- STEP 9: Advertise your new business. Use creative marketing to draw customers, such as a coupon book or a frequent-washer program.
- STEP 10: Hope for rain. Rain creates mud, mud makes cars dirty, and you’ll make them clean.
Tips & Warnings
- Consider the ups and downs of the car wash business. There may be certain seasons when people are more or less likely to get their car washed. Expect a seasonal business.
- Talk to owners of existing car washes. Ask them what problems they’ve had, what they would do differently if they could, and whether they want to sell their business. Buying an existing business is a lot easier, but could be more expensive.
- Make your business investments wisely. Don’t get soaked.
Estimated Car Wash Expenses
8.5% Soap/Wax, Chemicals
2.2% Pit Cleaning
8.0% Replacement Parts
11.0% Property Taxes
2.5% Waste Removal
sources: hillandfoss.com, smallbizbooks.com, ehow.com, dultmeier.com, photo from